Speculators Burned In Colorado 'Concept'

The Denver Business Journal reports on a real estate deal gone bad. "Real estate investors who signed contracts with Mile High Capital Group LLC are growing anxious about the prospects of getting their money back as the Englewood company reorganizes under the supervision of a bankruptcy court trustee. 'I'm getting by more on a prayer than a wing,' said Ron Hunt, a United Airlines flight attendant who invested $70,000 in five Mile High properties in addition to taking out $180,000 in construction loans on two Mile High projects." "Hunt, 52, bought the option to purchase Mile High duplex units in Grand Junction, Brighton, Cañon City, Colorado Springs and Kansas City. While his nearly completed Cañon City duplex is tied up in liens, Hunt said the remaining projects are far from completion." "Mile High, founded in 2000, told potential investors at real estate seminars around the country that it identifies and purchases tracts of land, develops subdivisions and sells plots to investor-owners. Once the developments were readied for construction, investors would take out real estate construction loans to build the actual units, which were mostly duplexes." "Earlier this week, the U.S. Trustee appointed Jay Smiley, a Denver-based attorney with experience in liquidation, to oversee the operation. Denver attorney James Faber, who's representing about 100 individual Mile High customers, hopes to persuade Smiley to authorize lawsuits against various Mile High-related entities and principals. In particular, Faber said his law firm is looking into recovering money that Mile High may have put into 1031 real estate exchanges. A 1031 exchange specifies that proceeds of land transactions can be reinvested as assets with no gain or loss recognized for tax purposes." "Shannon Kilkenny, who purchased a Mile High duplex in Milliken, said she considers herself lucky: She not only got an actual unit from the company, but a refund on a deposit she put down on Eagle Preserve, an undeveloped Mile High project in Brighton." "She attributes her good fortune to her acquaintance with one of the company's 'high-up guys.' Kilkenny, who lives in California, said rents on the unit are not covering her costs and that recently she received notice that one of several companies associated with Mile High, is going out of business and won't manage the property for her any longer." "Regardless of the difficulties, Kilkenny said she intends to hold onto the property for at least three years. 'I thought it was an innovative concept,' Kilkenny said about Mile High. 'If everything went as planned, it would have been a good deal.'"